The end of the year is just over two months away, and at least three weeks of that will be gobbled up by various holidays. So, take the time now to assess what you need to do to maximize your money by the end of the year.

Spend Down Your FSA
If you have a flexible spending account, any unused funds will vanish January 1, 2010. Remember, this is your money that was magically whisked from your paycheck before you received it. To avoid losing it, you need to use it up. So check the current balance and then start scheduling doctor visits, refilling prescriptions, and stockpiling supplies. Review your plan to make sure which appointments/purchases qualify.

Reassess Next Year’s Contributions
Take a look at your budget and expenses. Did you need to scramble to use up the FSA funds? Then perhaps contribute less next year. On the other hand, does anyone in your family have a major medical expense coming up? Maybe you should increase it. Look at it this way, you’ll spend this money either way. If you put it in an FSA, it will reduce your tax base and actually save you money.

Take Stock of Your 401K
If you stopped contributing during the crash, take a good look at your accounts and see if it’s time to get back in. This is also a good time to rebalance your portfolio. The economy has drastically changed – it might be time to get out of some sectors or into others. If you hold a variety of mutual funds, see if one has grown faster than the others and is now out of balance.

Estimate Your Taxes
If you’ve received a raise, run a small business in your spare time, had a major life change, or a major life issue, take a look at your tax bill. You can go to IRS.gov to use the withholding calculator. It’s not perfect, but it will give you an idea of whether you’ve under- or overwithheld. If it’s the former, change your W-2 to withhold additional funds and avoid a penalty. If you’re latter, decide whether you want to that money back now, and change your W-2 to withhold less, or plan ahead for how you’ll use that refund when it comes.

Maximize Your Tax Deductions
If you’re going to owe more than you thought, look into maximizing your tax deductions. For example:

  • See if you have any real stock losers that you can write off against capital gains or $3000 of ordinary income.
  • Are you just shy of the 7.5% of AGI minimum to deduct health costs from your taxes? Go see the doctor. If you have something big coming up next year that will put you over the limit, delay all other health costs until next year, too.
  • Are you debating whether to buy a car now or in January? Buy before the end of the year for that one-time new car tax deduction.
  • Make a few charitable donations or clean out your house and donate the decent stuff to a charitable thrift store.
  • Take advantage of Cash for Appliances. Upgrade your HVAC or water heater to also take advantage of the related tax credit (make sure it qualifies for both, first.)

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